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adultswim
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Excess labor value is the primary means of capitalist profit, so it should be obvious that productivity doesn't drive compensation. It's in their interest to keep compensation down, and because we live such a dominantly capitalist society, socially acceptable labor upkeep is kept to a minimum as well.

11/15/2018 12:49:31 PM

LoneSnark
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It is in my interest as a consumer to keep prices for the products I buy down, doesn't mean I get to do that. When I walk in to the car dealership and proclaim "I'll give you only $10k for this $20k car, accept it or don't feed your family." They'll obviously respond "Don't make us laugh. We don't really care if you buy the car, we'll find someone else to sell the car to that will pay what it is worth."

It is in the interest of workers to get paid as much as possible for their labor. If the capitalist in question decides to follow his interest and tell his workers "You'll accept $5 an hour or go starve in the street" his workers will obviously respond "This job sucks anyways, we don't really care what you feel like paying, we know lots of employers out there seeking employees and they'll pay what we're worth so good bye."

Again, in a market neither side gets to dictate anything. There is no monopsony in Seattle, so there is no one to decide "capitalist profit isn't what it needs to be, so we're going to lower wages commensurately." No such person exists. No such organization exists. If worker productivity goes up, profits will rise, so more businesses will succeed and need workers, creating a worker shortage. In such a situation, some employers will be trapped without enough workers to do business, lack of workers is costing them a profitable business. If they offer higher wages, it would fix their employee problem and stop them loosing money, at the expense of all other employers which must now match or lose. And there is nothing in society to stop them. A monopsony requires a mechanism of enforcement to force employers to sacrifice themselves and their own business for the profits of other capitalists they may not even know, and there is none in our society. This is why total worker compensation consistently follows worker productivity over time (delayed, of course, because markets can be sticky).

And it is why even in the capitalist utopia of Sweden which doesn't have a minimum wage, the capitalists that run that country's means of production cannot pay subsistence wages and get away with it: their workers would quit and find a more competitive buyer.

[Edited on November 17, 2018 at 6:34 PM. Reason : .,.]

11/17/2018 6:19:51 PM

adultswim
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Your argument might make sense if there wasn't already an extreme imbalance of power between the working class and the owning class. This is the problem with libertarianism. A society is not actually free if resources are hoarded by a dominant ruling class.

Quote :
"And it is why even in the capitalist utopia of Sweden which doesn't have a minimum wage, the capitalists that run that country's means of production cannot pay subsistence wages and get away with it: their workers would quit and find a more competitive buyer. "


Sweden has strong unions that dictate wages.

11/17/2018 7:38:24 PM

LoneSnark
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That is begging the question. The "imbalance of power" would be a monopsony. If there is no monopsony, then the "owning class" has no power to prevent their members from offering higher wages for their own private gain, therefore they have no more power than the car buying class or the produce buying class.

Sweden has strong unions, which represent 69% of the labor force. That's a lot. I'm glad to hear only 31% of the nation's labor force is dying on subsistence wages, by your understanding. Since it can't possibly be that businesses must compete for workers by offering competitive compensations.

11/17/2018 9:33:54 PM

adultswim
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Quote :
"That is begging the question. The "imbalance of power" would be a monopsony. If there is no monopsony, then the "owning class" has no power to prevent their members from offering higher wages for their own private gain, therefore they have no more power than the car buying class or the produce buying class. "


Cool so how do you propose ending the monopsony that currently exists and would still exist if we magically transitioned to libertarianism?

Quote :
"Sweden has strong unions, which represent 69% of the labor force. That's a lot. I'm glad to hear only 31% of the nation's labor force is dying on subsistence wages, by your understanding. Since it can't possibly be that businesses must compete for workers by offering competitive compensations."


Glad we agree that unions are a good idea.

11/17/2018 11:57:55 PM

TerdFerguson
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Quote :
"If worker productivity goes up, profits will rise, so more businesses will succeed and need workers, creating a worker shortage. In such a situation, some employers will be trapped without enough workers to do business, lack of workers is costing them a profitable business. If they offer higher wages, it would fix their employee problem and stop them loosing money,"



Now look at the empirical data:
- Productivity has been rising since forever.
- Corporate profits are at all-time highs
- unemployment has been sub-5% for the last 4 years
- compensation, and especially wages, have barely been growing faster than inflation in that time-frame.

There have been a lot of labor monopsony papers the past few years:
https://www.vox.com/the-big-idea/2018/7/31/17632348/wages-lagging-inequality-income-recovery-recession-wage-puzzle-economics
https://www.epi.org/publication/its-not-just-monopoly-and-monopsony-how-market-power-has-affected-american-wages/
https://www.nber.org/papers/w24147.pdf
http://rooseveltinstitute.org/how-widespread-labor-monopsony-some-new-results-suggest-its-pervasive/


Note that my hypothesis is a bit more complicated than just labor monopsony, as it involves unrealized demand and the prevalence of rent-seeking across our economy, but still, it’s self-evident to me that our economy isn’t functioning as conservative economist have suggested it would.

11/18/2018 9:21:24 AM

LoneSnark
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that last one was funny. They're going to look at one employment website, career-builder, then conclude from it that most of the country was operating under monopsony conditions. I checked career builder, it didn't have a single job listing for many counties in NC, so I guess that is proof that there isn't just few employers, but literally none? Odd to think such data readily exists at the BLS, but I suspect it would give a different result.

The rest of them note the fall in compensation as a share of GDP and conclude, obviously, it must be monopsony. Well, your other theories work much better, actually. Unrealized demand is a temporal thing. If there really is a nasty shortage of money velocity, prices will fall over time to compensate. And it wouldn't tend to drive up profits besides.

Rent seeking, however, we all should know is absolutely a thing that has gotten much worse. But the rent seeking problem would be in no way helped by a minimum wage increase. Our rent seekers don't tend to be big employers, especially not of low-wage employees, tending to employ lawyers and former politicians as their preferred employees.

So, ignoring that this has nothing to do with the minimum wage, the economy is rather broken. It is no accident corporate profits have skyrocketed while government spending did the same. But there isn't something broken about free enterprise. This particular ill springs entirely from the rules government is imposing upon the system.

11/18/2018 8:33:01 PM

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